What’s the Deal with Flood Insurance in Canada?
As spring approaches, many Maritime homeowners are concerned about the potential risk of flooding. Water entering your home often causes significant damage that can be costly to repair. To mitigate this risk, many homeowners consider purchasing “flood insurance.” With extreme weather events making water damage more common, it’s essential to determine how your insurance policy would respond to a water claim. This blog explores overland water & flood insurance and what it means for homeowners.
Water Damage Insurance in Canada?
The Canadian insurance industry places flood and water damage in different categories: overland water, groundwater, sewer backup, and standard water, such as that caused by burst water pipes.
Flood Insurance and Overland Water Coverage.
In Canada, flood insurance is typically called overland water coverage. Overland water coverage protects you from damage caused by excessive rain, overflowing rivers, spring run-off, and melting snow. It usually excludes damage caused by saltwater, such as tidal waves, and may exclude some flood damage.
Many home insurance policies in Canada do not automatically include coverage for overland water flooding. Don’t assume you have flood or overland water coverage, especially if you live in an area at risk of flooding. Not understanding your water damage coverage is one of several common mistakes when buying home insurance. It is essential to consult your home insurance provider for specifics about your coverage.
Why Should You Get Overland Water Coverage.
One of the biggest pros of getting flood insurance or overland water coverage is the peace of mind it provides. Having flood insurance can help you sleep better at night, knowing you are well protected in the event of a flood. And as you might imagine, flood damage can be expensive to repair. Overland water insurance covers the cost of damaged property repairs and replacements up to your policy limit.
What Is and Is NOT Covered by Overland Water Insurance?
A flood insurance policy covers damage to your home and contents from an overflowing body of water, such as lakes or rivers, onto dry land, leading to water entering your home. However, flood damage caused by saltwater is not covered, which is especially important to note.
Flood insurance does NOT cover damage caused by flooding from tidal waves, tsunamis, and storm surges. Flood insurance policies sometimes have a higher deductible, meaning you pay more out of pocket before your insurance coverage kicks in. Plus, some properties may not be eligible for flood insurance. For example, if your home is located in a high-risk flood zone, you may not qualify for this coverage. If this is the case, government assistance may be available, as with recent Hurricane Fiona damages.
What If I Have to Evacuate During a Flood?
Most home, condo, and tenant insurance policies cover out-of-pocket expenses for things like food and accommodation when you’re forced to leave home because of a flood. If you’ve purchased overland water coverage, you can claim your additional living expenses when your local government orders an evacuation because of flooding or if you need to stay away from your home during the repair process after a flood. Download this PDF from the Insurance Bureau of Canada on Dealing with the Impacts of Flooding for more information.
While flood insurance and overland water coverage provide peace of mind and financial protection, they can also be expensive and may have limited coverage. Ultimately, the decision to get overland water coverage should consider your circumstances, such as the location of your home, the risk of flooding, and your budget.
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